Changes to Student Loan Repayment Programs Not Enough, Advocates Say

Student Loan Girl — Thu, 30 Oct 2008 18:34:00 GMT

Despite 1,500 individuals and a dozen national organizations pushing for further changes to legislative provisions that help low-income college students repay their student loans, the Education Department recently issued the provisions’ final regulations without first making modifications to problematic language (“Low-Income Student Borrowers May Miss Some Intended Benefits,” The Chronicle of Higher Education, Oct. 26, 2008).

One issue involves the rules of a new student loan forgiveness program that would allow college graduates to have their federal loans forgiven in return for at least 10 years of public service in specific professions. Advocates of the program say that language in the program’s regulations fail to establish procedures that would inform college graduates ahead of time about which specific positions qualify for loan forgiveness.

Robert Shireman, executive director of The Project on Student Debt, a California-based advocacy group, believes that there may still be a way for the Department of Education to resolve this issue without having to backtrack through the regulatory process.

Education Department spokeswoman Samara Yudof, on the other hand, says that regulations for the loan forgiveness program “are clear, and provide a broad list of eligible occupations.” Department officials prefer to identify the eligible occupations in paperwork they give to applicants, instead of detailing the occupations within the regulations themselves, she says.

The other major regulatory issue creates a “double-counting penalty” for married couples under a new income-based repayment plan for student loans. If both partners are eligible for income-based repayment and they file joint income tax returns, supporters of the program say, the regulation’s language could be interpreted in such a way that the couple’s total joint income would be used to determine how much each spouse pays individually. This “double- counting” effect may require them to pay twice as much as two unmarried borrowers in similar financial circumstances.

“This is obviously unfair and inappropriate,” Shireman said, “and needs to be changed by Congress.” Yudof concedes that, in this case, Congress may need to take action to resolve the “double-counting” penalty problem.

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Changes to Student Loan Repayment Programs Not Enough, Advocates Say